Aging Trumps Health Cost Growth as the Main Cause of Future Misery
This is from Andy Biggs' American Enterprise Institute paper on the causes of our future entitlement spending crisis:
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A new consensus on entitlement reform has developed in Washington: rising per-capita health care spending is the only real crisis besetting the government's entitlement programs, while America's aging population and Social Security play minor roles at best….But this new consensus is flawed.
- Over the next twenty years, fully 60 percent of total entitlement spending increases will stem from population aging. It is not until 2045 that per-capita health care spending growth becomes the more important factor.
- In present-value terms, over the next seventy-five years, Social Security, Medicare, and Medicaid will cost an additional 5.7 percent of GDP, and the cost increases will be split almost evenly between population aging and excess health care cost growth.
